New agricultural insurance mechanism to be introduced in Azerbaijan in 2020
Baku, Azerbaijan, Aug. 20
The agricultural insurance mechanism was developed by a working group subordinate to the Azerbaijani Ministry of Agriculture with the participation of the representatives of the Ministry of Finance, Ministry of Economy, Ministry of Justice, Azerbaijan's Financial Market Supervisory Authority (FIMSA) and the State Committee on Property Issues, Trend reports referring to the Ministry of Agriculture.
The experience of such advanced countries as the US, Canada, Spain, Turkey and Israel was explored and taken into account while developing the mechanism. The meetings and discussions were held with the specialists in the field of agriculture from these countries. At the final stage, a model was prepared on the basis of the cooperation between the public and private sectors.
For the first time, a new insurance mechanism envisages the creation of a collective insurance system in Azerbaijan. The participants are insured through aggregate funds thanks to such a system by creating collective insurance capital. As opposed to the rules of insurance companies, if there are no insurance cases, these funds are not nullified, but are transferred to the next year.
Moreover, the state intends to subsidize agricultural insurance according to the interest rates. As a result, a stable and effective insurance system is expected to be ensured. The system will relieve the state budget of the excessive burden in cases of natural disasters and catastrophes.
These measures are expected to serve to an increase in GDP of the non-oil sector of the economy, ensure food security and attract investments in the agricultural sector.
The new mechanism envisages the establishment of a management body to be established by insurance companies under the Agricultural Insurance Fund. The management company will exercise the executive powers of the Fund, sell the insurance contracts, prepare and support its own e-information system.
The new mechanism will begin to operate from 2020.